What Iron Pipe Fittings Can Teach Us About Public and Private Power in the Market

Much of the current debate on competitive markets centers on whether state and local regulations that impede emerging players, like Airbnb, Tesla, or Uber, and restrict occupational entry serve the public interest. This focus on government restraints on competition implicitly discounts private efforts to create closed markets — whether it is, for example, by Amazon, Comcast, or Google. Listening to many politicians, lawyers, and economists talk these days, a layperson could be forgiven for assuming a competitive economy is one free from state intervention. But that is not the case, and sometimes it is only through public intervention that competition can be maintained against private forces seeking to do away with it. The Federal Trade Commission’s recent case against McWane’s monopolization of the domestic iron pipe fittings industry offers valuable insight on public and private power in the market. McWane exploited the “Buy American” provision in the 2009 stimulus program to preserve a monopoly. The government restricted foreign competition on stimulus projects to help the ailing U.S. economy, while McWane closed the pipe fittings market to bolster its own bottom-line. This episode suggests that public restraints on competition can promote the common good and that at the same time government action — through renewed enforcement of the antitrust laws — is critical to protecting markets against privately-erected barriers to competition.